Thinking about owning a rent-to-own house as a landlord? If you’re looking into it, make sure you read this blog post because we’re talking about rent-to-own homes: why it’s win-win for landlords – you might find it an interesting possibility for you!
When most people think of owning investment property, they think of rentals or flips. But there’s another way to invest and that’s rent-to-own. And that’s a smart way to invest because it can be a real win for landlords!
Rent-to-own works like this: tenants move into your property with the goal of paying rent until they can purchase the property. Different types of agreements may vary – sometimes they’ll pay a portion of their rent toward the purchase price; other times they’ll rent until they can get a mortgage. We often call this a Lease Option or a Lease with an Option to Purchase.
Either way: they’re renting… to own! And that’s a good thing if you’re the landlord. Here’s why…
Rent-To-Own Homes: Why It’s Win-Win For Landlords – 4 Reasons
There are 4 main reasons why rent-to-own houses are a really compelling opportunity for landlords.
Reason #1. Cash Flow
Owning a rent-to-own home gives you the cash flow of a rental property for a period of time. It’s a great way to earn an ongoing income, which can pay your bills, supplement your current income, or even pay for a vacation! And as you’ll see in a moment, you get the best parts of owning a rental property (the cash flow) without the worst parts of owning a rental property (which can be the tenants!)
Reason #2. Larger Deposits
Depending on how the deal is structured, you might arrange with the rent-to-own tenant that they’ll pay rent for a while and then pay off the rest of the house in a larger payment. That way, you get cash flow for a while but also a larger deposit of money when it’s time to sell.
Reason #3. Good Tenants
One of the complaints of many rental property landlords is that their tenants might disappear. But with a rent-to-own tenant, the tenant is looking for a house as a long-term place to live so they tend to stick around and take care of the property.
Reason #4. Protection
With rent-to-own, you don’t give up ownership of the property until the tenant has paid in full. Therefore, you’re protected against the tenant getting the house for less than the price you agree on.
Summary
Rent-to-own properties give you good cash flow, larger deposits of money, good tenants, and protection. No wonder more and more landlords love to own rent-to-own properties as an investment!